Trader Talk

Midday Buzz


Market is dealing with several problems today:

1) Boeing down more than 3% after it delayed deliveries of its 787 Dreamliner for six months, due to problems assembling the plane. Though they say it won't materially hurt 20087 or 2008 earnings, it is still a surprise.

Other stocks in the aerospace group are weak:

  • Honeywell make electrical and engine parts for planes
  • Rockwell Collins makes electronics and communication equipment for the planes
  • BE Aerospace makes cabin components like seats, coffe makers, and refrigeration equipment
  • Precision Castparts makes metal parts for the aerospace business
  • Spirit Aerosystems makes underwing components and wings themselves

    2) Energy companies are lowering earnings -- Chevron , Marathon , Valero . Combined with the lowering of earnings by financials last week, this means that third quarter earnings estimates for the S&P 500 as a whole are now going to go NEGATIVE.

    3) The market is also dealing with some contradictions:

    • The Dow and S&P are at new highs, but breadth is only fair--transports are lagging, small and midcaps lagging
    • Bullishness among financial newsletter writers is at the highest levels since Dec. 2005 -- yet market participation -- volume and buying interest -- are not very high
    • Q3 earnings now zero, but nobody is touching Q4 -- bulls say Q4 will clearly be stronger, bears say the numbers are going to come down -- quickly

    Questions?  Comments?